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Widows to put direct clients back in S2P

Scottish Widows is the latest life office to contract direct customers back into the state second pension automatically unless they choose otherwise.

Widows has written to around 7,500 direct customers telling them that it will contract them back into S2P by the end of January unless they object. This follows similar moves by Prudential and Norwich Union.

The customers are all over 50 and are expected by Scottish Widows to lose out financially if they remain con- tracted out.

No customer who is known to have an IFA will be contracted back in without a positive instruction to do so.

Widows has almost 250,000 customers who are contracted out of S2P through a personal pension. Around 180,000 of these were introduced by IFAs, who retain responsib- ility for advising on contrac- ting out.

Head of pensions market development Ian Naismith says: “We have decided to contract some customers back into S2P without an explicit instruction because we believe the risk of financial loss is becoming increasingly high.

“The customers we are contracting back in are those who we believe need the highest investment return from their contracted-out pension to match S2P.”

All Financial principal John Burrows says: “This is inevitable. Widows is not the first to do this and, from its point of view, in terms of customer care for direct customers and its own profitability, it is sensible.”

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